By Tiernan Ray

Rosenblatt Securities analyst Jun Zhang, who had previously warned of sluggish iPhone sales, today writes positively of select suppliers to Apple (AAPL), such as Qorvo (QRVO), given that the next model of iPhone, presumably an “iPhone 7,” should provide at least a near-term lift to components sales.

Rising Chinese competition continues to weigh on iPhone, he opines, but suppliers such as Qorvo and Cirrus Logic (CRUS) can do alright, he thinks:

We are not confident in iPhone 7 demand since we pointed out that Apple is facing more competition from Chinese OEMs in the high and middle-end mar- kets with faster hardware upgrades; however, as Q3 expectations have now been lowered, we believe Q2 earnings might not be as disappointing. We are positive on Qorvo (QRVO:NR), Cirrus Logic (CRUS:NR), CEVA Inc (CEVA:NR), TSM (TSM:NR), memory and panel suppliers into Q2 earnings due to stronger Q2 shipments to China with headwinds to be in August (Q3). We would use Q2 earnings strength to sell some component suppliers, such as Skyworks (SWKS:NR), InvenSense (INVN: Neutral), Qualcomm (QCOM: Neu- tral), ARM Holdings (ARMH:NR), and Knowles (KN:NR).

He also sees a temproary lift to Knowles (KN), which supplies various sorts of audio and other consumer electronics components:

We continue to be positive on Qorvo, but for Knowles, we expect a good Q2 earnings due to some market share gain among Chinese OEMs, and also be- lieve Q3 earnings might not be as disappointing due to content dollar growth in the iPhone 7 Pro; therefore, it is in our view that it is better to be negative on KN after Q2 earnings [...] Although we maintain our middle and long-term negative view, we believe KN in the near run might still enjoy the short-term market share gain among Chinese OEMs, as well as potential con- tent dollar growth in the iPhone 7 Pro.

About Tech Trader Daily

Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.